Up to date on April thirtieth, 2025 by Felix Martinez
Timbercreek Monetary Company (TBCRF) has two interesting funding traits:
#1: It’s a high-yield inventory primarily based on its 9.9% dividend yield.
Associated: Record of 5%+ yielding shares.
#2: It pays dividends month-to-month as an alternative of quarterly.
Associated: Record of month-to-month dividend shares
You’ll be able to obtain our full Excel spreadsheet of all month-to-month dividend shares (together with metrics that matter like dividend yield and payout ratio) by clicking on the hyperlink under:
The mix of a excessive yield and a month-to-month dividend renders Timbercreek Monetary interesting to particular person traders.
However there’s extra to the corporate than simply these components. Maintain studying this text to be taught extra about Timbercreek Monetary.
Enterprise Overview
Timbercreek Monetary is a mortgage funding firm that gives shorter-duration structured financing options to business actual property traders in Canada. The corporate focuses on lending towards income-producing actual property properties, comparable to multi-residential, retail, and workplace properties in city markets. Timbercreek Monetary was based in 2016 and is headquartered in Toronto, Canada.
Timbercreek Monetary employs a service-oriented enterprise method, providing debtors sooner execution and extra versatile phrases in comparison with Canadian monetary establishments. This is among the the reason why its clients resort to Timbercreek Monetary as an alternative of utilizing conventional banking channels.
Roughly 86.5% of Timbercreek Monetary’s properties within the portfolio are income-producing.
Supply: Investor Presentation
This function is paramount, because it renders the loans offered by the corporate far more dependable. Furthermore, 97% of the entire portfolio is invested in city markets, that are dependable.
Because of the nature of its enterprise, Timbercreek Monetary is delicate to the underlying financial circumstances. A few of its clients can not borrow funds by way of conventional banking channels, and due to this fact, they’re usually susceptible throughout financial downturns.
Certainly, Timbercreek Monetary was harm by the fierce recession attributable to the coronavirus disaster. In 2020, the corporate incurred a 39% lower in its earnings per share, from $0.51 to $0.31. Happily, the recession proved short-lived because of the unprecedented fiscal stimulus packages supplied by the Canadian authorities in response to the pandemic. In consequence, Timbercreek Monetary has absolutely recovered from this disaster.
In This fall 2024, Timbercreek Monetary grew its internet mortgage funding portfolio by $72.2 million to $1.09 billion, pushed by sturdy mortgage originations. Distributable earnings held regular at $17.7 million ($0.21 per share), and dividends remained at $0.17 per share. Decrease rates of interest supported a wholesome internet curiosity margin, whereas the corporate reported a modest restoration from a resolved staged mortgage however took an Anticipated Credit score Loss on two Calgary workplace loans, lowering internet earnings to $2.4 million.
For the total 12 months, internet funding earnings totaled $104.3 million, down from 2023’s peak on account of falling charges. Distributable earnings was $64.9 million ($0.78 per share) with an 88.3% payout ratio. Web earnings earlier than ECL was $62.3 million; after ECL, it was $46.2 million. The portfolio remained conservatively positioned, with 89.6% in first mortgages and a mean loan-to-value ratio of 63.3%.
CEO Blair Tamblyn highlighted sturdy This fall originations and a optimistic market outlook. The corporate expects staged mortgage resolutions to proceed enhancing in 2025 and anticipates steady efficiency from its post-2022 mortgage ebook, which displays present market circumstances.
Supply: Investor Presentation
Development Prospects
Timbercreek Monetary pursues progress by lending funds to new clients at enticing rates of interest. It makes an attempt to lend funds towards income-producing properties to make sure that its loans can be serviced with none points.
Sadly, that is simpler mentioned than carried out. To make sure, the corporate has didn’t develop its earnings per share during the last seven years. The uninspiring efficiency has partly resulted from the devaluation of the Canadian greenback vs. the USD. U.S. traders ought to be conscious that the fluctuation of the change price between these two currencies considerably impacts the earnings and dividends of Timbercreek Monetary in U.S. {dollars}.
Even when the devaluation of the Canadian greenback is taken under consideration, Timbercreek Monetary nonetheless has a poor efficiency file during the last seven years, because it has hardly grown its backside line. Subsequently, it’s prudent for traders to be conservative of their progress expectations.
Given the considerably unstable efficiency file of Timbercreek Monetary and the sensitivity of its earnings to fluctuations in change charges, we anticipate roughly flat earnings per share over the subsequent 5 years.
Dividend & Valuation Evaluation
Timbercreek Monetary is at present providing an exceptionally excessive dividend yield of 9.9%, which is greater than six instances the yield of the S&P 500. The inventory is thus an attention-grabbing candidate for income-oriented traders, however they need to bear in mind that the dividend is much from secure on account of its sensitivity to the aforementioned fluctuations in foreign money change charges.
Furthermore, Timbercreek Monetary at present has a payout ratio of 139%, which is unsustainable in the long term and doesn’t present a margin of security. Moreover, the corporate is delicate to the underlying financial circumstances. In consequence, at any time when it faces a possible recession, it might lower its dividend.
It’s also essential to notice that Timbercreek Monetary is delicate to the yield curve. When the danger of an upcoming recession will increase, short-term rates of interest exceed long-term rates of interest; in such a case, the revenue margin of Timbercreek Monetary on new loans is basically eradicated. That is exactly what the corporate is experiencing proper now.
In reference to the valuation, Timbercreek Monetary is at present buying and selling for 12.1 instances its earnings per share within the final 12 months. Given the corporate’s unstable efficiency file, we assume a good price-to-earnings ratio of 12.0 for the inventory. Subsequently, the present earnings a number of is marginally greater than our assumed honest price-to-earnings ratio. If the inventory trades at its honest valuation degree in 5 years, it’ll lower a marginal 0.2% annualized headwind in its returns.
Contemplating the flat earnings per share over the subsequent 5 years, the 9.9% present dividend yield, and a 0.2% annualized compression of the valuation degree, Timbercreek Monetary may provide a mean annual whole return of 9.7% over the subsequent 5 years. It is a first rate anticipated return, however we might require a better return to advocate shopping for this unstable inventory. Subsequently, traders ought to watch for a considerably decrease entry level.
Closing Ideas
Timbercreek Monetary provides an exceptionally excessive dividend yield of 9.9% and pays its dividends month-to-month, which can entice some income-oriented traders.
Nonetheless, the corporate has a payout ratio of 139%, which makes it susceptible to a possible recession, in addition to the inversion of the yield curve. Subsequently, the dividend of Timbercreek Monetary is much from secure.
Furthermore, Timbercreek Monetary is characterised by extraordinarily low buying and selling quantity. Which means it’s laborious to determine or promote a big place on this inventory.
Don’t miss the assets under for extra month-to-month dividend inventory investing analysis.
And see the assets under for extra compelling funding concepts for dividend progress shares and/or high-yield funding securities.
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